September Brent crude LCOU7, -0.06% on London's ICE Futures exchange rose 1 cent to $47.75. Demand accelerated in the second quarter, growing to 97.4 million barrels a day - 1.5 million barrels a day faster than in the second quarter of 2016. Production (the IEA's estimation) was lagging behind demand at 96.69 million bpd in May.
There was evidence of strong important demand from China in June's trade data with average imports increasing to 8.55mn bpd during the first half of 2016, an increase of 13.8% from the same period in 2016. "We will call on all those who are also producing, who are not members of OPEC, to continue to support the process of stabiliding the market for the common good of all", he said. In such a case a deeper cut might pressure prices further instead of supporting them.
Saudi Arabia in turn plans to export less: it is planned to cut shipments in August by more than 600,000 bpd, taking exports for that month to their lowest level this year, to balance a seasonal rise in domestic use. Between 2011 to 2014, when oil prices ranged between $57.33 to $126.65 a barrel, OPEC producers enjoyed a cost advantage of $10 to $40 per barrel over listed "Big Oil" firms, according to Goldman's analysis.
The OPEC and non-OPEC technical committee has requested that Libya and Nigeria attend its meeting on July 24 and report on their oil production. Technically, the deal now permits Libya and Nigeria to continue with unfettered production for the rest of 2017 and into the first quarter of 2018, but there are some indications that OPEC may pressure these two countries to cut production sooner.
On the bullish side, the market is being supported by EIA remarks from earlier in the week calling for USA crude oil production to rise by less than previously forecast next year due to a lower price outlook. Its current output is around 1.7 million barrels a day, excluding condensates, Kachikwu said.
On the impact of the slow production on Nigeria's budget, Mr. Kachikwu said with projected 2.2 million barrels and benchmark price of price of $42.50 per barrel approved in the budget, the country lost about four months due to delay in the approval of the budget. Although the EIA reported drawdowns in inventories, it also reported a rebound in production figures, dashing hopes that output was on the decline.
A similarly-minded Bob Dudley, chief executive officer of BP, reiterated the familiar criticism that markets must stop taking into account data on a weekly basis, and that the harsh reality is inventory levels globally "are so high", discouraging him from any position other than crude prices remaining more or less where they are now.
According to the U.S. Energy Information Administration, crude inventories declined by 7.6 million barrels last week, compared with analysts' forecasts for a decrease of 2.9 million barrels.
OPEC members are having trouble keeping their promises. Despite a summer slowdown in loadings for China, a key buyer of Angolan oil, US and Indian loadings rose to their highest in roughly a year, according to Reuters tracking. While further upside could be expected in the short term amid the speculations of a cut in U.S production, gains may still be limited by the firm oversupply dynamics.